I have a meeting for a potential seed investor. I have been working on a big idea for the last 2 years. Proto- bus plan- marketing plan, website is done. The idea has the potential to become very big very quickly. I am asking for $70,000. I was thinking to give him 10% of the company until he gets 20 times investment and then 1% of the company. Or should I set up a promissory note ? What would be the best set up for it? What if he wants stock?
I'm intrigued that you wrote that you have a business plan which is an investment document. If an MBA prepared the business plan, they should have discussed and outlined how you should proceed. If you are using the term 'business plan' to refer to the strategic plan for your business, your questions make sense. An equity agreement is binding and should be entered into with an experienced business or securities attorney. Equity is nothing more than a concept if your company is unregistered. Any bona fide investor would be unwise to give money to an informal entity. Your guesstimates of what level of return should be paid and the way you wish to approach this investment indicate you are in need of legal leadership.
Answered 6 years ago
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